No, Switzerland will not be enacting the world’s highest minimum wage

posted at 6:01 pm on May 19, 2014 by Erika Johnsen

Switzerland has consistently resisted some of the more blatantly progressive-populist-socialist impulses that have gripped many of their continental neighbors — joining the 28-members of the European Union and their unified currency system springs immediately to mind — and the Swiss once again just declined the growing trend to implement their own top-down minimum wage in a national referendum over the weekend.

Swiss voters resoundingly rejected on Sunday a proposed minimum wage that would have been the world’s highest, a move widely seen as reflecting an aversion to state intervention in the liberal economic policies that are the bedrock of Switzerland’s prosperity.

Trade unions had sought a minimum hourly wage of 22 Swiss francs, or $24.65, in what they said was an effort to ensure fair salaries for workers in the lowest-paid sectors, such as retailing and personal services. Switzerland has no national minimum wage.

The proposed rate — considerably higher than elsewhere in Europe and more than double the $10.10 President Obama has sought in the United States — found little support in a national referendum, with 76.3 percent opposed, according to initial results released by the government. …

“Switzerland, especially in popular votes, has never had a tradition of approving state intervention in the labor markets,” said Daniel Kubler, a professor of political science at the University of Zurich. “A majority of Swiss has always thought, and still seems to think, that liberal economic principles are the basis of their model of success.”

A lot of Switzerland’s industries already have individualized collective bargaining agreements with their respective workers, but Swiss Big Labor has been trying to argue that in a handful of job areas, wages haven’t kept up with high cost-of-living increases. Meanwhile, businesses have countered that the country’s relative labor freedom helps to maintain its economic dynamism, and that a national minimum wage would lead to job losses, especially among unskilled workers, while eroding competitiveness. Most Swiss voters evidently agreed, and clearly, Switzerland is doing something right compared to its neighbors:

The Swiss cabinet, known as the Federal Council, and both houses of Parliament urged voters to reject the measure, saying it didn’t take into account regional and sector differences that might merit different pay. They also said the minimum wage would make it more difficult for low- and unskilled job seekers to find work.

Business lobby Swissmem said state control of pay would be a “flawed experiment” with the potential to undermine collective wage agreements in place in most industry sectors. Opponents also said Switzerland’s employment system, which relies heavily on apprentice programs, would be undermined by the minimum wage. The youth unemployment rate in Switzerland is 3%, compared with 23.7% in the surrounding euro zone.

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The proposed rate — considerably higher than elsewhere in Europe and more than double the $10.10 President Obama has sought in the United States — found little support in a national referendum, with 76.3 percent opposed, according to initial results released by the government. …

This is misleading.

Adjusting to purchasing power parity, $25 in Switzerland are the equivalent to $14 in the USA.

“If the initiative had been accepted, without doubt that would have led to job cuts, particularly in remote and structurally weaker regions,” Swiss Economy Minister Johann Schneider-Ammann said at a news conference. “The best remedy against poverty is work.”

“A majority of Swiss has always thought, and still seems to think, that liberal economic principles are the basis of their model of success.”

It should be noted that in Switzerland, like neighboring France, “liberal economic principles” means liberty of free enterprise, or “laissez-faire” capitalism, where the government stays out of private businesses. “Liberals” in Switzerland do not embrace that government-controlled nanny state that “liberals” in the USA propose.

Switzerland has also achieved budgetary surplus in every fiscal year since 2006.

joana on May 19, 2014 at 6:16 PM

It’s not that interesting. Switzerland is culturally homogenous. They have a 3% unemployment rate, they don’t have whole swaths of people living decade to decade on welfare. They still have a national identity, they’re not some ‘melting pot’ that we think is so wonderful. Is it any surprise they’re dominating? Not to me, but give them a few more decades of Muslim influx, and watch them go to hell just like GB, Netherlands, etc…

Trade unions had sought a minimum hourly wage of 22 Swiss francs, or $24.65, in what they said was an effort to ensure fair salaries for workers in the lowest-paid sectors, such as retailing and personal services. Switzerland has no national minimum wage.

Well then, they must be the Keystone Kops of trade unions. They need to take a lesson or two from the Fabian Socialists running our trade unions and go for incrementalism. They gave the frog a chance to jump out of the pot by going for too much too quickly. You have to lull the populace to sleep first.

It’s not that interesting. Switzerland is culturally homogenous. They have a 3% unemployment rate, they don’t have whole swaths of people living decade to decade on welfare. They still have a national identity, they’re not some ‘melting pot’ that we think is so wonderful. Is it any surprise they’re dominating? Not to me, but give them a few more decades of Muslim influx, and watch them go to hell just like GB, Netherlands, etc…

nullrouted on May 19, 2014 at 6:25 PM

The USA has been a ‘melting pot’ for a long time. That metaphor came to usage in the late 19th century. That didn’t stop America from becoming one of the most powerful economic forces in the history of human civilization.

Switzerland is a bit of a melting pot as well. 25% of the population is foreign born. The naturalization rates have been climbing and about 7% of the Swizz citizens are naturalized. Almost 30% of resident foreigners acquire Swiss citizenship. They have 4 official languages. There’s no such thing as a homogeneous religion.

On the other hand, you have countries far more culturally homogeneous than Switzerland with a high government spending/GDP rate (Sweden, Denmark, Finland, etc) and countries with plenty of demographic and cultural diversity like Singapore keeping very low rates of government spending. Or Australia, for example, another melting pot and their government spending/GDP ration is already lower than ours.

In other words, the idea that cultural homogeneity is an explaining factor on this is completely bogus. There’s not even a correlation, let alone a causation. In fact, the standard economic theory is that culturally homogeneous societies tend to be more tolerant of high levels of government spending and welfare.

It should be noted that in Switzerland, like neighboring France, “liberal economic principles” means liberty of free enterprise, or “laissez-faire” capitalism, where the government stays out of private businesses. “Liberals” in Switzerland do not embrace that government-controlled nanny state that “liberals” in the USA propose.

In other words, the idea that cultural homogeneity is an explaining factor on this is completely bogus. There’s not even a correlation, let alone a causation. In fact, the standard economic theory is that culturally homogeneous societies tend to be more tolerant of high levels of government spending and welfare.
joana on May 19, 2014 at 6:45 PM

It depends on which culture you’re speaking of. The US, at one time WAS culturally homogenous even though we were never ethnically homogenous. The culture of most Scandinavian countries is Western socialist. Is Switzerland socialist in their economic practices?

It depends on which culture you’re speaking of. The US, at one time WAS culturally homogenous even though we were never ethnically homogenous. The culture of most Scandinavian countries is Western socialist. Is Switzerland socialist in their economic practices?

Cleombrotus on May 19, 2014 at 6:56 PM

What does that even mean? Isn’t it obvious that Switzerland isn’t socialist in their economic practices? My comment on their spending/GDP ratio wasn’t a clue?

Multicultural countries like the Switzerland, Australia, Singapore, Canada and the US are far less socialist in their economic practices than culturally homogeneous countries like Sweden, Portugal, Spain, Greece, Denmark, etc.

Erika, whatever happened to their vote on a “guaranteed income”? Do you know? I remember hearing a lot about it last Nov./Dec. In particular, news stories always mentioned the vote was “happening soon” but then they never reported the result. I presume it was defeated.

We should copy the swiss in all things. I would trade my passport for a swiss one anyday of the week.

uatu1878 on May 19, 2014 at 7:09 PM

Switzerland, Australia, even Canada–all have realized what it takes to be a successful society: strong property rights, limited immigration, federalism. Only the US thinks that massive 3rd World chain immigration leads to prosperity.

Adjusting to purchasing power parity, $25 in Switzerland are the equivalent to $14 in the USA.

joana on May 19, 2014 at 6:10 PM

The median hourly wage is about $37 an hour.

The unemployment rate in Switzerland is a ‘whopping’ 3.2%.

“If the initiative had been accepted, without doubt that would have led to job cuts, particularly in remote and structurally weaker regions,” Swiss Economy Minister Johann Schneider-Ammann said at a news conference. “The best remedy against poverty is work.”

Resist We Much on May 19, 2014 at 6:12 PM

It’s convenient these two comments follow one another. Together, they prove that higher wages do not necessarily translate to a higher standard of living.

They also prove that not mandating a minimum wage does not hurt the average worker while also improving the job market.

The one thing that really stuck out to me was the comment about heavy reliance on apprenticeship programs instead of expensive collegiate programs. What happened to learning a trade from a master of it, where you learn what you actually need and gain experience at the same time? Makes a hell of a lot more sense than spending years learning skills irrelevant to any occupation, before starting working while hundreds of thousands of dollars in the hole.

Erika, whatever happened to their vote on a “guaranteed income”? Do you know? I remember hearing a lot about it last Nov./Dec. In particular, news stories always mentioned the vote was “happening soon” but then they never reported the result. I presume it was defeated.

somebody page coolpubica and give her the bad news. not long ago she was debating the matter vigorously, splaining to the mortals here how Switzerland is this bastion of socialism :)…swizterland, of all countries in europe :)..

It depends on which culture you’re speaking of. The US, at one time WAS culturally homogenous even though we were never ethnically homogenous. The culture of most Scandinavian countries is Western socialist. Is Switzerland socialist in their economic practices?

Cleombrotus on May 19, 2014 at 6:56 PM

I have lived on Switzerland periodically for the better half of two decades.

Switzerland is like America with very diverse regions and cultures. You can go from “liberal” french speaking Geneva to ultra-conservative german speaking Appenzell Innerrhoden (which reluctantly gave women the right to vote in 1991!). Most of the country though is very protective of its Swiss identity.

Immigration is a HUGE issue here, but the good guys are winning. The rise of the rightwing Swiss Peoples Party and the recent EU immigration vote are clear symptoms of this.

Unfortunately, I can’t say the same with the US, with worthless RINOs like Boehner & Co pushing for amnesty.

It must be repeated, lest the trolls usurp and trumpet the term, that in this statement:

“A majority of Swiss has always thought, and still seems to think, that liberal economic principles are the basis of their model of success.”

The term liberal means “unencumbered by government”, or “at liberty”, the correct classical usage of the word, completely unlike the current American and euro-socialist usage, which means “government regulation against business, and utterly libertine personal behavior”.